How to Calculate Income Tax on Salary with Example?

Tax season is here and I am sure many people like you would want to know

how to calculate income tax on salary with examples. Before I get into it, you must know that

in India, income tax is calculated based on a progressive tax slab system. For the financial year 2023-24, individuals below 60 years of age are taxed as follows: 

• Up to ₹2.5 lakh (nil tax)

• ₹2.5 lakh to ₹5 lakh (5% tax)

• ₹5 lakh to ₹10 lakh (20% tax)

• above ₹10 lakh (30% tax). 

To calculate tax on salary, add up all sources of income, including salary, and deduct exemptions and deductions under various sections like 80C, 80D, etc. Then apply the applicable tax slab rates to arrive at the total tax liability.

How to Calculate Income Tax for Salaried Person with Example?

To calculate your income tax liability, you can simply use the

Income Tax Calculator

provided by the Income Tax Department, Government of India.

Enter your salary, allowances, deductions, and exemptions into the calculator, and it will compute your tax liability automatically based on the latest tax rules and rates.

To manually calculate income tax, start with your gross salary and subtract exemptions such as:

• HRA (House Rent Allowance)

• LTA (Leave Travel Allowance)

• Standard deduction

Then deduct applicable deductions under sections like 80C, 80D, etc. The resulting figure is your taxable income. Next, apply the applicable tax slab rates mentioned earlier to compute the tax liability. Finally, add cess and surcharge, if applicable, to arrive at the total tax payable.

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Hi, I see you wish to know how to calculate income tax from salary with example. Well let me give you a case scenario. Assume Ankit who is 38 years old has income from salary at Rs. 22,00,000 and the income earned from other sources amounts to 30000. His total tax liability would be Rs. 500760 for the old regime while Rs. 383760 according to the new tax regime, assuming there are no other deductions. Let’s assume that the deductions amount to Rs. 300000, then according to the new tax regime his tax liability will be Rs. 383760. According to the old tax regime, he will be liable to pay Rs. 407160.